How Foursquare Made The Bold Decision To Split Its Product In Two, And How Both Apps Have Been Doing Since

Foursquare CEO Dennis Crowley Flickr/Big Omaha Over the summer, Foursquare unbundled its app into two separate products: Swarm and Foursquare.

Swarm, the company decided, would be the check-in app. It would house the app's founding gamification features, locating nearby friends, and checking in to venues.

The Foursquare app would become a mobile-first Yelp app. It would be a hub for local mobile searches; it'd also be an activity-recommendation tool.

The move was risky. Dozens of news outlets, from The Verge to Shape magazine, celebrated the reimagined products. The bold decision got Foursquare ranked #9 on Business Insider's annual SA 100 list of coolest people in NYC tech.

How did Foursquare, a five-year-old startup that has raised more than $100 million, arrive at the decision to pull apart its business and start from scratch? Business Insider got the backstory. Here's how it went down.

In late 2013, Foursquare CEO Dennis Crowley and his leadership team decided it was time to rethink things. If the company was founded today, what would the app look like? What would the experience feel like?

The new Swarm app houses Foursquare's original check-in feature. swarm Crowley promoted Foursquare employees Jon Steinback and Noah Weiss to oversee the process. Steinback became VP of Product Experience; Weiss became VP of Product Management. Eleven Foursquare employees were then asked to speak with every other employee, as well board members, about what was working at Foursquare and, more importantly, what wasn't. They were given eleven days to make the rounds.

Another team was assembled to make sense of all the feedback and come up with an improvement action plan. This team decided it was best to completely tear apart Foursquare's app, break it into two products, and reimagine the entire Foursquare experience.

In December, Crowley unveiled the plan to all employees. He told them Foursquare was going to "take apart all the lego blocks and rebuild the app." Employees were told to rest up and prepare to sprint beginning January 1.

The reimagined Foursquare app. Foursquare

In the new year, Foursquare went through a massive reorganization and separated all departments outside of sales and ops into one of two teams: "Batman" (the internal name for the new Foursquare app) and "Robin" (the internal name for Swarm).

Crowley, Steinback, Weiss and VP of Engineering Harry Heyman began having daily two-hour "huddles" about the apps and their progress, lending advice to the Batman and Robin teams working on Swarm and Foursquare.

In May, Foursquare was finally ready to unleash Swarm. Two months later, the reimagined Foursquare app was released.

Initially, the reaction to Foursquare's new apps was positive. A company spokesperson says more than 40 million tastes (e.g. "tacos," "beer," "cold brew") were added to the app within two weeks. About 200,000 people were opting to personalize their Foursquare experiences every day. In August, about 7 million tips were added to the app (a 275% increase from the month prior).

According to Comscore, Swarm grew 198% from June to July (from 717,000 unique mobile users to 2.1 million mobile unique users) and 36% from July to August (from 2.1 million unique mobile users to 2.9 million unique mobile users).

How have both products been doing since launch?

A quick look at US App Store rankings for both Swarm and Foursquare show popularity declining. If you go on App Annie, you can see the spike in Foursquare's US ranking the day it launched in August. But the app seems to have fallen out of the top 1,000 apps, right back where it was before the relaunch. Here's that chart, below.

App Annie

When Foursquare relaunched, it changed its category in the App Store. Instead of being a social networking app, Foursquare sees its new self as a travel app. Here's how both categories have been trending, before and after the relaunch in August. The red line is the social networking category, the yellow line is travel. App Annie How about Swarm?

Swarm nearly hit #1 in the App Store when it launched in May. It dipped significantly after users had trouble with it crashing. When Foursquare relaunched in August, Swarm's popularity soared again to the top of the charts. But now, it's right back where it was in June, outside of the top 1,000 apps in the US App Store. Swarm's ranks catapulted to a near-top spot in the US on the day it launched, and back up when Foursquare relaunched. But now it's sinking. App Annie

In the social networking category however, Swarm is holding its position in the US top 100. App Annie App Store and Google Play store rankings aren't the only ways to measure the success (or failure) of Foursquare's relaunch. They don't show Foursquare's engagement metrics, or the number of mobile web visits Foursquare.com is getting. Foursquare's usage is now split 50/50 between its mobile app and mobile web products; mobile usage in general is up 60% year over year.

Additionally, Foursquare's downloads, monthly uniques to Foursquare.com, number of API calls per day and revenue growth are all on the upswing, according to a Foursquare spokesperson.

The decision to unbundle Foursquare seems to be validated. Foursquare is seeing one-third of users exclusively use Swarm, one-third of users exclusively use the new Foursquare, and one-third of its users using both apps. Those usage patterns are the whole reason Foursquare decided to split itself apart in December.

"We constantly hear [people] use Foursquare for two things - to keep up and meet up with their friends, and to discover great places," Crowley wrote in May when Swarm was announced. "But, as it turns out, each time you open the app, you almost always do just one of those things."

But Foursquare knows it needs to find a way to keep users hooked post-relaunch. The company says it's planning to focus more efforts on consumer marketing in the upcoming months to acquire new users.

(Startups frequently spend marketing dollars to boost user metrics, which is a fine plan as long as users don't churn quickly, and the company doesn't spend too much money acquiring potentially-disloyal users.)

"We've spent five years building Foursquare and eight months alone on developing Foursquare 8.0," A Foursquare spokesperson told Business Insider in an email. "We view the release of Foursquare 8.0 (and Swarm) as the beginning of a re-education and launch period, not as a final action."